NEW DELHI, July 30 (Reuters) - India's ruling Congress party
approved on Tuesday the creation of a new southern state, a move
that has revived deep political divisions and raised fears of
violence in the area, home to global firms including Google.

The decision to break up Andhra Pradesh state and establish
Telangana comes ahead of elections next year and critics say the
ruling party is seeking to shore up its political fortunes after
dragging its feet over the explosive issue for four decades.

Supporters, however, say Telangana's economic development
has been neglected in favour of the richer and more powerful
Andhra region, and that a new state is the only solution.

"It was not an easy decision, we appeal to people to
cooperate," said Ajay Maken, a spokesman of the Congress after
the party's highest decision-making body adopted a resolution
calling for the establishment of a new state, igniting
celebrations in parts of Andhra.

Additional federal troops were deployed ahead of the
decision in the coastal parts of Andhra Pradesh where people are
bitterly opposed to the breakup of the state.

The booming state capital Hyderabad, where Google, Microsoft
and Dell have major sites, will remain the
common capital for two states for a period of 10 years, Maken
said.

Hyderabad, India's sixth largest city, was a bone of
contention because it fell in the proposed new state carved out
of the western part of Andhra Pradesh.

A government official said there was still a long way to go
before the new state, which will have an estimated population of
40 million, became a reality. The measure has to be approved by
the Andhra assembly and then the federal parliament where the
Congress does not have a clear majority.

"We're swallowing the poison for our party. The decision is
very unfortunate but since our leader has taken the decision
we'll abide by it. We know the consequences, the problems that
will follow," said Rudraraju Padma Raju, the chief whip of the
Congress in the state, who has long opposed the split.

"DANGEROUS TREND"

One immediate consequence is likely to be renewed demands
from other parts of India for separate states, including in the
Darjeeling hills and a further breakup of the most populous
Uttar Pradesh state.

Since independence in 1947, successive governments have
dealt carefully with demands for new states - creating three in
2000 - while ensuring demands did not spiral enough to threaten
the integrity of a nation that now has 1.2 billion people with
hundreds of languages, ethnicities and castes.

India currently has 28 states while the United States with a
population of 300 million has 50.

The chief minister of revolt-torn Jammu and Kashmir state
said he feared the establishment of Telangana would set off more
unrest.

"Telangana is a state that will be created on the basis of
agitation. It's not created on the basis of any recommendation
of a state reorganising commission or something like that," said
Omar Abdullah.

"I believe this is a dangerous trend because all we are
doing is sending across a message that if you agitate enough,
and if you agitate long enough, you will create a state."

Another fear is that leftist guerrillas who operate in parts
of the proposed Telangana state will become further emboldened
and take advantage as the new state comes into being.